Honda Announces Price Hike of Upto Rs.1.5Lakh from January 2009

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Honda recently made news with its massive price-cut on its Civic Hybrid, which was then taken back. Now, Honda plans to hike car prices across models starting from Rs 10,000 upto Rs 1.5 lakh with effect from January next year. The company blames the depreciation of the rupee against dollar and expensive raw materials.

Jnaneswar Sen, marketing vice-president for Honda Siel Cars, said that the rupee depreciation has impacted the company’s production costs, forcing it to go for a price hike despite a slowdown in the market.

Many of the parts are imported and the rupee’s depreciation has made them expensive . Thus, we will be revising car prices with effect from the first week of January,” The highest impact would be on the sports-utility vehicle CR-V, which is imported to India as a completely-built unit (CBU). “The price of the CR-V will go up by at least Rs 1.5 lakh,” Sen said.

While price of the luxury sedan Honda Accord will go up by Rs 30,000-50 ,000, Honda Civic will set you back by a extra Rs 10,000-20 ,000. “

Many of the components used in the cars are imported from Japan and the US, For the moment we do not plan to increase the price of City as its new model has just been launched and we have to make deliveries at the announced price. We have received as many as 5,000 bookings so far,” Sen said.

He said raw material prices also remained high despite softening in commodity prices. “While there has been talk of steel getting cheaper, the price of auto grade steel has still not come down,”

Honda’s price hike comes at a time when the Indian car industry is in the clutches of Credit-Crunch, when car makers normally offer price cuts to boost up sales. The bad news for Honda is that, in the April-October 2008 period sales fell 28% at 24,952 units against 34,578 units in the corresponding period last year.